Oil markets fell by around 30 percent In Monday morning. This is the largest one-day fall since the gulf war in 1991. Brent futures contracts have seen their second-largest decline in history. Also, stock markets are down by nearly 10% today. What does this mean for Bitcoin?
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On Saturday, Saudi Arabia said it would increase its oil production from April this year. In this way, the OPEC + alliance broke up, which existed for just over three years.
A few days earlier Russia did not agree to its cuts in extraction of raw material. In turn, Rusia wanted to put a strong pressure on the United States, which in recent years has become the world’s largest oil producer. The problem is that we are talking about oil production from shale, and this is possible only when the oil price is high enough. At a price of $50 or less, the extraction of oil from shale rocks in the US is simply unprofitable.
– The Kremlin has decided to sacrifice OPEC + to stop American shale oil producers and take revenge for US interference in the construction of the Nord Stream 2 gas pipeline – Alexander Dynkin, president of the Russian state-owned think tank, says in an interview with Bloomberg. – Of course, enraging Saudi Arabia can be risky, but this is Russia’s strategy at the moment – he adds.
Brent and WTI contracts fell in the morning by around 30 percent, currently at around USD 36 and USD 33, respectively. Experts say further drops are ahead.
Is Bitcoin a safe haven?
Is the world moving again towards a decentralized economy? Associations of states or organizations – such as OPEC + or the European Union – are experiencing their crises or falling apart – these are facts.
However, bitcoin and cryptocurrencies have also declined. The price of Bitcoin has dropped below USD 8,000 for the first time since January 10. Experts say that this is the effect of people from PlusToken who put pressure on the price of BTC.
If the situation on the oil market has long-term consequences for the world, some investors will start fleeing towards safe harbors.
Thus, we return to the question of whether BTC is a safe haven. The digital currency exchange rate responded positively to the Cypriot crisis in 2013, now recently to the trade war between China and the US, the threat of armed conflict in Iran, and finally the first wave of panic associated with the coronavirus. Now, however, falling. Why? It is possible that BTC is still going its own way and is not at all connected with the geopolitical and macroeconomic situation. At least not as much as his supporters would like.
However, there is also hope that the current declines are just a correction, which even had to follow the strong increases from the beginning of the year. So if this is only a temporary “failure”, soon BTC should surprise us again making big moves to the upside.